Duty Drawback Scheme: Eligibility, Rates & How to Claim
TL;DR - Summary
- What is the duty drawback scheme? - It refunds eligible customs and central excise duty on inputs used in exported goods. It is not an upfront exemption or a refund of GST.
- Who is eligible for duty drawback? - Manufacturer-exporters and merchant exporters can claim for eligible goods, subject to the duty-paid input, export and scheme conditions. Export proceeds must be realised within the permitted period, including approved extensions.
- How are duty drawback rates determined and calculated? - CBIC notifies product-wise All Industry Rates, while Brand Rates reflect verified eligible duty costs. A hypothetical Rs 50,000 FOB shipment at 2% gives Rs 1,000 before any applicable cap.
- How do you claim duty drawback, and what can go wrong? - Declare the claim on the shipping bill at export. Missing declarations or documents can delay payment; failure to realise export proceeds within the permitted period can lead to recovery.
What Is the Duty Drawback Scheme?
The duty drawback scheme refunds eligible customs and central excise duty on inputs used to manufacture exported goods. It returns eligible duty costs after export, rather than granting an upfront exemption. This guide covers drawback on manufactured goods; re-export of imported goods follows a separate route.
The refund can cover eligible raw materials, components and packing materials. It excludes import IGST and compensation cess, which follow separate refund or credit rules. You cannot recover the same duty twice.
✅ PRO TIP
Track input duty payments from day one. Keep purchase, import and production records together so you can support the eligible duty costs behind a claim.
Who Is Eligible for Duty Drawback?
Manufacturer-exporters and merchant exporters can claim drawback on eligible exported goods. The applicable rate, duty-paid inputs and scheme conditions matter; exporting alone does not guarantee a refund.
- The goods meet the relevant drawback conditions, including eligible duty-paid inputs and no duplicate refund of the same duty
- The goods are physically exported
- Export proceeds are realised within the period allowed under FEMA, including any approved extension
Duty drawback is one of the export promotion schemes for Indian exporters, but eligibility also depends on exclusions. AIR generally excludes exports under Advance Authorisation or DFIA, and goods manufactured or exported by EOUs or SEZ units. Special Advance Authorisation exports of apparel have separate notified treatment. Check the applicable schedule conditions before claiming.
What Are the Types of Duty Drawback?
For manufactured exports, the main rate routes are All Industry Rate (AIR) and Brand Rate. AIR is notified for product categories. Brand Rate may apply where no rate is determined, or where AIR is less than 80% of the eligible duties paid on inputs, subject to the application conditions.
| Parameter | All Industry Rate (AIR) | Brand Rate |
|---|---|---|
| Who qualifies | Exporters whose product category has a pre-fixed rate | Exporters with no determined rate, or AIR below 80% of eligible input duties, subject to the rules |
| How the rate is set | Fixed periodically by CBIC for broad product categories | Determined individually from verified eligible input duty costs |
| Documentation needed | Shipping bill declaration and applicable supporting records | Detailed application with input duty payment proofs |
| Typical processing time | No individual rate-fixation process; payment still depends on clearance and checks | Individual rate verification is needed; timing depends on the application |
AIR avoids a separate rate-fixation application. If it is less than 80% of your eligible input duty costs, consider the special Brand Rate route before filing. A larger refund is not automatic.
Brand Rate is not reserved for large businesses. Where AIR exists, the less-than-80% test matters, and a final AIR claim can prevent a later application under this route. Discuss the correct declaration with your customs broker before filing.
An exporter should not assume that the All Industry Rate will always reflect the actual duty burden on their inputs. Businesses with significant variations in raw material costs, sourcing or import duties should compare the notified rate with their eligible input duty costs before deciding whether to apply for a Brand Rate.
How Are Duty Drawback Rates Determined?
CBIC notifies AIR by product category and revises rates periodically. Brand Rate is determined individually from verified eligible duty costs. Use the schedule, notes and amendments effective for your export date.
A higher FOB export value does not automatically mean a higher drawback rate percentage. The rate is fixed by product category, whatever the invoice amount.
Always check the applicable schedule and amendments before filing. An outdated rate or missed condition can lead to an incorrect claim.
✅ PRO TIP
Check CBIC’s drawback notifications before every shipment cycle. Read the schedule together with later amendments, the tariff description, unit and any value cap.
How to Calculate Duty Drawback on Export?
For a percentage-based AIR, start with FOB export value in INR × applicable drawback rate. If the schedule sets a per-unit cap, compare that amount with quantity × cap and use the lower amount. Some entries use a fixed amount per unit instead; other eligibility limits also apply.
Here is a hypothetical example, not a quoted garment rate. An exporter ships goods with an FOB value of Rs 50,000 at an assumed AIR of 2%. Rs 50,000 × 2% = Rs 1,000. If 100 units have an assumed cap of Rs 8 each, the cap is Rs 800, so the admissible amount is Rs 800, assuming all other conditions are met.
For a percentage-based rate, use the shipping bill’s FOB value in INR, not simply the buyer’s gross foreign-currency payment. The export invoice, freight and insurance adjustments and applicable customs exchange rate help establish that FOB value; quantity matters where a per-unit cap applies.
If AIR is less than 80% of eligible input duties, a special Brand Rate application may be available. For example, an AIR amount of Rs 1,000 is below 80% of Rs 1,500 in eligible duties, but not below 80% of Rs 1,100. Recovery depends on verified eligible costs and the rules, not a promise to refund every duty paid.
✅ PRO TIP
Confirm the drawback schedule entry and product description, not just the customs tariff heading. The schedules align at four digits but can differ at six or eight digits; the wrong entry can change your rate and cap.
How to Claim Duty Drawback: Step-by-Step Process?
Declare drawback on the shipping bill at export. For standard AIR claims, the EDI shipping bill serves as the claim once the required export records are complete. Brand Rate needs a separate rate application. Register and validate your drawback bank account on ICEGATE and track queries as well as payment status.
- Declare the drawback claim on the shipping bill at the time of export. Indicate the drawback schedule serial number and the applicable rate on the EDI (Electronic Data Interchange) shipping bill filed through the ICES (Indian Customs EDI System).
- Customs grants the Let Export Order (LEO) before the goods leave India. After shipment, the carrier files the Export General Manifest (EGM) or applicable departure record to confirm export.
- The EDI shipping bill serves as the AIR claim when the required export records are complete. Check that the EGM is filed and any customs queries are answered.
- After the claim is processed and sanctioned, drawback is paid electronically to your registered bank account through PFMS. Incomplete export records, bank details or unanswered queries can delay payment; there is no universal few-working-day credit guarantee.
- For Brand Rate, apply to the jurisdictional Principal Commissioner or Commissioner of Customs with duty and production records, normally within three months of the relevant LEO date. Extensions are possible on application, subject to the rules and fees.
- Track your claim through ICEGATE’s drawback enquiry using the shipping bill number, date and customs location. Check the scroll and payment status and respond to queries.
Keep evidence that the export payment was realised, linked to the shipment. A separate FIRC for every receipt is not a universal drawback requirement. Skydo automatically provides a free Foreign Inward Remittance Advice (FIRA) for processed payments; keep it with the bank and shipping records needed for reconciliation.
⚠️ COMMON MISCONCEPTION
Drawback can be recovered if export proceeds are not realised within the permitted FEMA period, including extensions, subject to the applicable exceptions. Customs can ask for realisation evidence within 30 days of its notice. For partial non-realisation, recovery is proportionate to the unpaid export proceeds. A missing FIRC alone is not the same as an unpaid export.
What Is the Difference Between RoDTEP and Duty Drawback?
Duty drawback covers eligible customs and central excise duty on inputs, while RoDTEP remits specified embedded taxes not refunded elsewhere. Eligible goods can receive both without refunding the same duty or tax twice; each scheme’s exclusions and declarations still apply.
Think of duty drawback as recovering eligible input duty costs. The RoDTEP scheme covers otherwise unrefunded central, state and local taxes and levies involved in producing and distributing exported goods. Neither is a blanket refund of every business cost. Drawback is paid to your bank account; RoDTEP is issued as transferable electronic duty-credit scrips.
RoDTEP can cover embedded costs such as specified fuel taxes and electricity duty that no other scheme refunds. You can claim both benefits on an eligible shipment, but do not assume every product qualifies for RoDTEP. Apparel and made-ups have separate RoSCTL treatment.
✅ PRO TIP
Review your cost sheet for both customs duty on inputs and embedded domestic taxes before filing. You may be leaving money on the table by claiming only one of the two schemes.
How Skydo Helps Exporters Manage International Payments and Export Compliance
Claiming duty drawback is only part of the job. You also need to track export proceeds and keep evidence of realisation. Missing records can make a customs enquiry harder to answer, while overdue unpaid proceeds can put drawback at risk.
Skydo is set up to keep that documentation in order. Here is what it gives you:
- Free FIRA: We automatically provide a free Foreign Inward Remittance Advice for processed payments. Download it for your export records. It is not a bank-issued FIRC or a guarantee that customs will accept every drawback claim.
- Free local receiving details: Receive eligible buyer payments in USD, EUR, GBP, SGD, AUD, CAD and AED for settlement to your Indian bank account. We aim to credit funds within one to three business days after successful compliance screening, subject to the corridor, banks and other checks in the payment chain.
- Transparent pricing: Standard fees are $19 up to $2,000, $29 for $2,001–$10,000, and 0.3% above $10,000, plus 18% GST on the fee. We offer zero forex markup; check your payment quote and terms, including SWIFT deductions and separate Amazon Global Selling pricing.
- Online setup: Start your application online, with no standard monthly account fee. Activation depends on KYC, document checks and approval, rather than a guaranteed 10–15-minute turnaround.
- eBRC assistance: We help map bank-reported IRMs to shipping bills so you can review and generate eBRCs through the DGFT process. Exporters self-certify the eBRC; the AD bank separately handles EDPMS reconciliation. This assistance does not automatically close a drawback claim.
- India-based support: Reach our team for help with payment and documentation queries. Resolution time depends on the issue and any bank or compliance checks; it is not guaranteed.
Who is eligible to claim duty drawback in India?
Manufacturer-exporters and merchant exporters can claim for eligible goods, subject to the applicable rate, input-duty and scheme conditions. Keep the required declarations and records, and realise export proceeds within the permitted FEMA period, including approved extensions.
How is the duty drawback amount calculated on an export shipment?
What is the difference between All Industry Rate and Brand Rate?
What is the difference between duty drawback and RoDTEP?
How do I check my duty drawback status?
What happens if foreign payment is not realized in time?
Where can I find the latest duty drawback rates?
How long does it take to receive the duty drawback credit?
